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Thursday, June 20 2019 @ 11:20 AM UTC

Maersk dropping Jamaica hub

Canal Daily Operation By Julian Richardson for The Jamaica Observer - Just under two years after Jamaica and Maersk signed a five-year contract to use the Kingston Container Terminal as a regional trans-shipment hub, the Danish shipping line says it will drop direct calls to Jamaica, starting in October. The move is part of a reduction Maersk will implement on its weekly AC1 loop connecting ports in Japan, China and Korea with the Caribbean and Mexico. Under the new arrangement, Maersk will also drop direct calls to Manzanillo in Panama. "Maersk said the AC1 service will connect to the Caribbean markets from its continuing call at its Balboa, Panama, feeder hub," said a news story on the American Shipper website. "The change will allow the Danish line to reduce the number of vessels on the service from eight to seven." (more)

On Monday, Pat Belanfanti, assistant vice president, public relations at the Port Authority of Jamaica, confirmed the planned reduction in service but emphasised that the shipping line was not pulling out of Jamaica.

"What I do know is that Maersk went into a merger and bought another shipping line and lost over a billion dollars," he said. "Apparently they didn't do their proper due diligence... they lost their money and are in the process of revamping... (because of) that they may have one of their lines not stopping here; that is scheduled to be in October... There will be reduction in their volume, but it's not a complete pull-out at all."

Maersk officials in Denmark and Kingston could not be reached for comment. However, last week, shipping industry sources told the Business Observer that the Maersk decision will result in Jamaica being served by feeder ships instead of the mother ships that now serve the AC1 loop.

The Business Observer was unable to determine the effect that the Maersk decision will have on the Port Authority's revenue. However, it was clear that the 20-foot equivalent unit (TEU) volume would be reduced as feeder ports receive fewer trans-shipment boxes than main ports.

When the Government and Maersk signed the hub deal in November 2005, the Port Authority had fast-tracked a planned US$200 expansion of the Kingston Container Terminal which, they said, would more than double the handling capacity of the terminal to 3.2 million TEUs from the 1.5 million TEUs being handled at the time.

Last year, Maersk was expected to move 600,000 TEUs, but the Danish shippers apparently did not meet that target after losing business to aggressive competitors on the world market.

The congestion in the Kingston Harbour late last year apparently also played a minor role in the Maersk decision, as some lines, unwilling to attract extra costs from the delays, bypassed Jamaica for Panama from where feeder ships brought cargo back to Jamaica.

The American Shipper website said the revised AC1 will use ships in the 4,000-TEU to 5,000-TEU range with a port rotation of Xingang; Qingdao; Ningbo; Shanghai; Kwangyang; Yokohama; Balboa; Lazaro Cardenas, Mexico; Yokohama; and back to Xingang.

"The 4,000-TEU vessel Maersk Malacca will make the first eastbound voyage on the new rotation when it departs Xingang on October 5," the American Shipper story said.

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